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Your Exam Content Outline
The following outline describes the content of one of the New Mexico insurance examinations. The outlines are the basis of the examinations. The examination will contain questions on the subjects contained in the outline. The percentages indicate the relative weights assigned to each part of the examination. For example, 10 percent means that 6 questions will be drawn from the section on a 60-question exam, 10 will be drawn on a 100-question exam and 15 will be drawn on a 150-question exam.
New Mexico Examination for Life, Accident and Health or Sickness Insurance Producer Series 18- 27
150 questions – 2.5-hour time limit
Effective April 30, 2019
1.0 Insurance Regulation 5% (8 Items)
1.1 Licensing
Process (59A-11-2, 3, 59A-12-12; Reg 13.4.2.8, .9)
Types of licensees (Reg 13.4.2.7, .11)
Insurance Producers (59A-12-2)
Brokers (59A-12-3)
Consultants (59A-11A-1–8)
Nonresident (59A-12-25) (59A-11-24)
Temporary (59A-11-4; 59A-12-19; Reg 13.4.2.12)
Maintenance and duration
Expiration and renewal (59A-11-10, 11; Reg 13.4.2.17, .18)
Address change (59A-12-17) (59A-11-
Continuing education (59A-12-26; Reg 13.4.7.9, .12)
Disciplinary actions
Suspension, revocation, or refusal to renew (59A-11-8, 10, 14–16, 18)
Cease and desist orders (59A-16-27)
Penalties and fines (59A-1-18, 59A-11- 17, 21)
1.2 State regulation
Superintendent's general duties and powers (59A-2-8–10)
Company regulation
Certificate of authority (59A-5-10)
Unfair claim settlement practices (59A- 16-20)
Complaint record (59A-16-22)
Appointment of Insurance Producer (59A- 11-12; Reg 13.4.2.17)
Termination of Insurance Producer appointment (59A-11-13; Reg 13.4.2.29)
Insurance Producer regulation
Shared commissions (59A-12-24)
Fiduciary duties (59A-12-22)
Prohibited premiums or charges (59A-16-
Unfair trade practices Misrepresentation (59A-16-4, 23)
False advertising (59A-16-4, 5)
Twisting (59A-16-6)
Defamation (59A-16-10)
Unfair discrimination (59A-16-12, 13, 17(D))
Rebating (59A-16-16–18)
Boycott, coercion, or intimidation (59A- 16-19)
Examination of books and records (59A-4-3,
Insurance Fraud Act (59A-16C-1–16)
Consumer information privacy (59A-2-9.3; Reg 13.1.3.1–.28)
1.3 Federal regulation
Fair Credit Reporting Act (15 USC 1681– 1681d)
Fraud and false statements (18 USC 1033,
2.0 General Insurance 5% (8 Items) 2.1 Concepts
Risk management key terms
Risk
Exposure
Hazard
Peril
Loss
Methods of handling risk
Avoidance
Retention
Sharing Reduction
Transfer Elements of insurable risks
Adverse selection
Reinsurance
2.2 Insurers
Types of insurers
Stock companies
Mutual companies
Fraternal benefit societies
Risk retention groups
Private versus government insurers
Authorized versus unauthorized insurers
Domestic, foreign and alien insurers
Financial status (independent rating service)
Marketing (distribution) systems
2.3 Insurance Producers and general rules of agency Insurer as principal
Insurance Producer/insurer relationship
Authority and powers of Insurance Producers
Express
Implied
Apparent
Responsibilities to the applicant/insured
2.4 Contracts
Elements of a legal contract
Offer and acceptance
Consideration
Competent parties
Legal purpose
Distinct characteristics of an insurance contract
Contract of adhesion
Personal contract
Unilateral contract
Conditional contract
Legal interpretations affecting contracts Ambiguities in a contract of adhesion
Reasonable expectations Indemnity
Utmost good faith
Representations/misrepresentations
Warranties
Concealment
Fraud
Waiver and estoppel
3.0 Life Insurance Basics 10% (15 Items) 3.1 Insurable interest (59A-18-4, 5, 7, 8)
3.2 Personal uses of life insurance
Survivor protection
Estate creation
Cash accumulation
Liquidity
Estate conservation
3.3 Determining amount of personal life insurance
Human life value approach
Needs approach
Types of information gathered
Determining lump-sum needs
Planning for income needs
3.4 Business uses of life insurance including key person 3.5 Classes of life insurance policies
Group versus individual
Permanent versus term
Payment of premiums (59A-20-13)
Grace period (59A-20-4)
Reinstatement (59A-20-12, 16)
Incontestability (59A-20-5)
Misstatement of age (59A-20-7)
Exclusions (59A-20-25)
Settlement of death benefit (59A-20-14)
Prohibited provisions including backdating (59A-20-26)
5.2 Beneficiaries
Designation options
Individuals Classes
Estates
Minors
Trusts
Succession
Revocable versus irrevocable
Common disaster clause
Spendthrift clause
5.3 Settlement options
Cash payment
Interest only
Fixed-period installments
Fixed-amount installments
Life income
Single life
Joint and survivor
5.4 Nonforfeiture options
Cash surrender value
Extended term
Reduced paid-up insurance
5.5 Policy loan and withdrawal options
Cash loans
Automatic premium loans
Withdrawals or partial surrenders
5.6 Dividend options
Cash payment
Reduction of premium payments
Accumulation at interest
One-year term option
Paid-up additions
5.7 Disability riders
Waiver of premium
Disability income benefit
Payor benefit life/disability (juvenile insurance)
5.8 Accelerated (living) benefit provision/rider
Conditions for payment
Effect on death benefit
5.9 Riders covering additional insureds
Spouse/other-insured term rider
Children's term rider
Family term rider
5.10 Riders affecting the death benefit amount
Accidental death
Guaranteed insurability
Cost of living
Return of premium
6.0 Annuities 8% (1 1 Items) 6.1 Annuity principles and concepts
Accumulation period versus annuity period
Owner, annuitant and beneficiary
Insurance aspects of annuities
6.2 Immediate versus deferred annuities
Single premium immediate annuities (SPIAs)
Deferred annuities
Premium payment options
Nonforfeiture
Surrender charges
Death benefits
6.3 Annuity (benefit) payment options Life contingency options
Pure life versus life with guaranteed minimum
Single life versus multiple life
Annuities certain (types)
6.4 Annuity products
Fixed annuities
General account assets
Interest rate guarantees (minimum versus current)
Level benefit payment amount
Equity indexed annuities
6.5 Uses of annuities
Lump-sum settlements Qualified retirement plans including group and individual annuities
Personal uses
Individual retirement accounts (IRAs)
Tax-deferred growth
Retirement income
Education funds
7.0 Federal Tax Considerations for Life Insurance and Annuities 3% (4 Items) 7.1 Taxation of personal life insurance
Amounts available to policyowner
Cash value increases
Dividends
Policy loans
Surrenders
Amounts received by beneficiary
General rule and exceptions
Settlement options
Values included in insured's estate
7.2 Modified endowment contracts (MECs)
Modified endowment versus life insurance
Seven-pay test
Distributions
7.3 Taxation of non-qualified annuities
Individually-owned
Accumulation phase (tax issues related to withdrawals)
Annuity phase and the exclusion ratio
Distributions at death
Corporate-owned
7.4 Taxation of individual retirement accounts (IRAs)
Traditional IRAs
Contributions and deductible amounts
Premature distributions (including taxation issues)
Annuity phase benefit payments
Values included in the annuitant's estate
Amounts received by beneficiary
Roth IRAs Contributions and limits
Distributions
7.5 Rollovers and transfers (IRAs and qualified plans)
7.6 Section 1035 exchanges
8.0 Qualified Plans 1% (1 Items) 8.1 General requirements
8.2 Federal tax considerations
Tax advantages for employers and employees Taxation of distributions (age-related)
8.3 Plan types, characteristics and purchasers
Simplified employee pensions (SEPs)
Self-employed plans (HR 10 or Keogh plans)
Profit-sharing and 401(k) plans
SIMPLE plans
403(b) tax-sheltered annuities (TSAs)
9.0 Health Insurance Basics 7% (11 Items) 9.1 Definitions of perils
Accidental injury
Sickness
9.2 Principal types of losses and benefits
Loss of income from disability
Medical expense
Dental expense
Long-term care expense
9.3 Classes of health insurance policies
Individual versus group
Private versus government
Limited versus comprehensive
Conditionally renewable
Renewable at option of insurer
Nonrenewable (cancelable, term)
11.0 Disability Income and Related Insurance 5% (8 Items) 11.1 Qualifying for disability benefits
Inability to perform duties
Own occupation
Any occupation
Pure loss of income (income replacement contracts)
Presumptive disability
Requirement to be under physician care
11.2 Individual disability income insurance
Basic total disability plan
Income benefits (monthly indemnity)
Elimination and benefit periods
Waiver of premium feature
Coordination with social insurance and workers compensation benefits
Additional monthly benefit (AMB)
Social insurance supplement (SIS)
Occupational versus nonoccupational coverage
At-work benefits
Partial disability benefit
Residual disability benefit
Other provisions affecting income benefits
Cost of living adjustment (COLA) rider
Future increase option (FIO) rider
Loss-of-time benefit adjustment (59A-22-
Other cash benefits
Accidental death and dismemberment
Rehabilitation benefit
Medical reimbursement benefit (nondisabling injury)
Refund provisions
Return of premium
Cash surrender value
Exclusions
11.3 Unique aspects of individual disability underwriting
Occupational considerations
Benefit limits
Policy issuance alternatives
11.4 Group disability income insurance
Group versus individual plans
Short-term disability (STD)
Long-term disability (LTD) 11.5 Business disability insurance
Key person disability income Disability buy-sell policy
11.6 Social Security disability
Qualification for disability benefits
Definition of disability
Waiting period
Disability income benefits
11.7 Workers compensation
Eligibility
Benefits
12.0 Medical Plans 9% (1 4 Items) 12.1 Medical plan concepts
Fee-for-service basis versus prepaid basis vs. expense basis
Expense based basis versus indemnity
Specified coverages versus comprehensive care
Benefit schedule versus usual/reasonable/customary charges
Any provider versus limited choice of providers
Insureds versus subscribers/participants
Qualified Health Plans
EPOs
HDHPs 12.2 Types of providers and plans
Limited Benefits Insurance
Indemnity plan features
Excepted Benefits Plans
Hospital Indemnity Insurance
Accident only insurance
Specified Disease
Major medical insurance (Comprehensive Insurance)
Characteristics
Participating vs Non-Participating providers
Deductibles, Copay and Coinsurance
Emergency care Preventive Care Services
Common limitations
Provisions affecting cost to insured
Qualified Health Plans (QHPs)
General characteristics
EHBs
CSR and APTCs
Special Enrollment Periods
Preventive Care Services
Maximum out of Pocket,
Open Enrollment Period
Preexisting Exclusions
Health maintenance organizations (HMOs)
General characteristics
Primary care physician versus referral (specialty) physician
Emergency care
Hospital services Other basic services
Preferred provider organizations (PPOs)
General characteristics
Open panel or closed panel
Types of parties to the provider contract
Point-of-service (POS) plans
Nature and purpose
PCP referral (gatekeeper PPO)
HDHP plans
Features and purpose
Exclusive Provider Organization Plans
Features and purpose
Indemnity plan features
12.3 Cost containment in health care delivery
Cost-saving services
Preventive care
Hospital outpatient benefits
Alternatives to hospital services
Utilization management
Prospective review Concurrent review
Grievance procedures Network Adequacy
12.4 New Mexico eligibility requirements and benefit offers (individual and group)
Dependent child age limit (59A-22-2(C))
Continued coverage of handicapped children (59A-22-33)
Newborn child coverage (59A-22-34)
Adopted child coverage (59A-22-34.1)
Child enrollment; noncustodial parents (59A- 22-34.2)
Home health care coverage (59A-22-36)
Managed Health Care Rule (Reg 13.10.13.8– .12)
Mental health parity (59A-23E-18)
Women's health care benefits Patient Protection Act (59A-57-3)
12.5 HIPAA (Health Insurance Portability and Accountability Act) requirements
Eligibility
Guaranteed issue
Pre-existing conditions
Creditable coverage
Renewability
12.6 Medical savings accounts (MSAs), Flexible savings accounts (FSAs), Health savings accounts (HSAs), Health reimbursement accounts (HRAs)
Definition
Eligibility
Individual eligibility requirements
Enrollment
Coverages and cost-sharing amounts
Exclusions
Claims terminology and other key terms
Part C — Medicare Advantage
Part D — Prescription Drug Insurance
15.2 Medicare supplements (Reg 13.10.8.6- .78)
Purpose Open enrollment
Standardized Medicare supplement plans Core benefits
Additional benefits
New Mexico regulations and required provisions
Advertising
Standards for marketing
Permitted compensation arrangements
Suitability for recommended purchase
Required disclosure provisions
Outline of coverage (59A-24A-9)
Right to return (free look) (59A-24A-10)
Replacement
Benefit standards
Pre-existing conditions (59A-24A-4(B))
Guaranteed issue
Prohibited provisions (59A-24A-4) Medicare SELECT (Reg 13.10.8.26)
15.3 Other options for individuals with Medicare
Employer group health plans
Disabled employees
Employees with kidney failure
Individuals age 65 and older
Medicaid
Eligibility
Benefits
15.4 Long-term care (LTC) insurance
Eligibility for benefits
Levels of care
Skilled care
Intermediate care
Custodial care
Home health care
Adult day care
Respite care
Benefit periods
Benefit amounts Optional benefits
Guarantee of insurability Return of premium
Qualified LTC plans
Exclusions
Underwriting considerations
New Mexico regulations and required provisions
Advertising (59A-23A-11; Reg 13.10.15.36)
Standards for marketing (Reg 13.10.15.36, .49–.53)
Prohibited marketing practices (Reg 13.10.15.38)
Suitability of recommended purchase (Reg 13.10.15.40, .52)
Required disclosure provisions (Reg 13.10.15.19, .50–.53) Outline of coverage (Reg 13.10.15.45, .46)
Shoppers guide (Reg 13.10.15.47)
Right to return (free look) (59A-23A- 6(E))
Replacement (Reg 13.10.15.25, .42)
Policy standards (59A-23A-6)
Benefit triggers (Reg 13.10.15.44)
Pre-existing conditions (59A-23A-7)
Inflation protection (Reg 13.10.15.24)
Nonforfeiture benefit offer (Reg 13.10.15.43)
Unintentional lapse (Reg 13.10.15.17)
Penalties (Reg 13.10.15.48)
15.5 New Mexico Medical Insurance Pool and Health Insurance Alliance (59A-54; Reg 13.10.10.1–.24; Bul 2008-006)
Eligibility
Coverages and limits
Exclusions
Deductibles and coinsurance
16.0 Federal Tax Considerations for Health Insurance 3% (4 Items) 16.1 Personally-owned health insurance
Disability income insurance
Medical expense insurance
Long-term care insurance
16.2 Employer group health insurance
Disability income (STD, LTD)
Medical and dental expense
Long-term care insurance
Accidental death and dismemberment 16.3 Medical expense coverage for sole proprietors and partners
16.4 Business disability insurance
Key person disability income
Buy-sell policy
16.5 Medical savings accounts (MSAs), Flexible spending accounts (FSAs), Health savings accounts (HSAs), Health reimbursement accounts (HRAs)
